While many attorneys and clients are aware of basic financial provisions that must be included in almost every divorce agreement—alimony, child support, equitable distribution—there are certain financial considerations that should not be overlooked for those in Orthodox Jewish communities. Payment of yeshiva tuition is one such issue.
If children were in yeshiva day school during the marriage, and that is a practice the parties wish to continue following the divorce, it is important to include a provision for continued payment of tuition in a divorce agreement.
Many times, parties will agree that the payment of tuition is in proportion to the income of the parties. The following example is illustrative of how tuition is typically apportioned between parents in a divorce:
David and Miriam are getting divorced. They have three children in yeshiva day school. Miriam earns $25,000 as a substitute teacher. David earns $150,000 as an engineer. Together, David and Miriam earn $175,000.
Because Miriam earns about 14% of the overall income of the parties (assuming she is not receiving alimony), David and Miriam may agree to split tuition such that David is paying 86% of the overall tuition, and Miriam is paying 14%.
However, if one party is entitled to a scholarship or another type of tuition break, that calculation becomes more nuanced.
Altering the facts of the example above yields a very different analysis:
Miriam earns a minimal income. She has limited ability to even afford 14% of the tuition for the parties’ three children after payment of rent, gas, food and other basic expenses. Hence, she decided to become a substitute teacher in her children’s school. She is granted a tuition reduction as part of her compensation package. She is now only required to pay half of her own share.
David discovers that Miriam is paying only half of what she would have paid without the tuition break. He thinks to himself: “We agreed to divide tuition in proportion to our incomes, but now Miriam is getting a reprieve from that agreement, and I’m stuck paying my whole share. That’s not fair.”
David believes he is entitled to have the entire amount of the tuition reduced by the discount Miriam received based upon her inability to pay the 14% of tuition and her decision to work in the school. He asks Miriam to pay 14% of the new reduced amount, which is hardly a discount at all for her.
Miriam refuses David’s proposal and says that it would not be fair for David to receive the benefit of the tuition break that she is working to receive. She reasons that it is her labor that has reduced her share of the tuition, not David’s. She thinks, “If David wants to get creative with how he funds the cost of tuition, let him! He should not get a windfall because I am paying another way.”
If a tuition break of the type described above was not included in the parties’ agreement, litigation may ensue, and David and Miriam may need a court to apportion the cost of tuition.
Another complication can arise when one party receives family support toward the payment of tuition. Many times, during a marriage, parents, or grandparents of one of the spouses (or both) may help contribute toward the cost of yeshiva tuition.
But what happens when parties are getting divorced and the parents and/or grandparents are gifting money with the expectation that it will only be used toward their child or grandchild’s share, and specifically indicate that it will not be used to defray the cost of the other parent?
The one gifting certainly may gift for a specific purpose, to a specific person, or not at all. There is no obligation of anyone to donate a gift in any amount to a relative. Hence, the spouse who does not receive the family support does not have a right to claim it for their own use.
However, simply because a parent cannot lay claim to a gift from their former spouse’s family, does not mean there cannot be some accounting for that gift in a settlement agreement.
Back to David and Miriam:
David pays 86% of the tuition, but receives money from his family to fund the entire cost. Miriam pays 14%, but receives no family support. David’s family has no obligation to fund any portion of the tuition, and certainly has no obligation to fund Miriam’s share.
This issue can resolve in a number of ways, assuming it is foreseen and negotiated at the time of the divorce agreement. One option is for David to contribute a sum directly to Miriam to reimburse her for a share of what she is required to pay. This way, there is a recognition of David’s superior financial position insofar as the payment of tuition is concerned.
Another option is to increase the amount of child support David pays to help defray Miriam’s other child-related expenses.
Finally, the parties may agree to have David pay a larger proportion of other expenses that the children incur: extracurricular activities, camps, medical expenses, etc.
In sum, the resolution of continued tuition payment upon divorce can look a number of ways. However, it is an issue that should not be overlooked if it is a priority for a family. As always, it is important to have the advice of a lawyer who understands the nuances of the issue and can negotiate your agreement accordingly.
Eliana T. Baer is a partner in the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or [email protected]